In a life insurance illustration that shows future premiums being paid from nonguaranteed values, which disclosure must accompany the illustration?

• A. She may need to resume premium payments, depending on actual results.
• B. The illustration guarantees premiums will never change.
• C. Nonguaranteed values have no impact on future premiums.
• D. The policy will lapse if nonguaranteed values are insufficient.

Answer: (A)

When an illustration shows future premiums being funded from nonguaranteed values, you must disclose that those nonguaranteed amounts are not guaranteed and the policyholder may need to resume premium payments if actual results don’t pan out as shown. Nonguaranteed values can fluctuate, so the illustration may not fully cover future costs unless the owner is prepared to continue paying premiums out of pocket.

This is why the statement about possibly needing to resume premium payments, depending on actual results, is the accurate disclosure. It avoids giving the impression that premiums are locked in or that nonguaranteed values have no impact. It also avoids implying automatic lapse based solely on nonguaranteed values; lapse would depend on whether the owner resumes payments or other funding remains available.